Maharashtra sugar commissioner: ‘Liquidity, one-time payment of FRP may pose issues’

Shekhar Gaikwad
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Source : ET | 02 Dec, 2020 | 04:58 PM

Shekhar GaikwadMaharashtra’s 2020-21 sugarcane crushing season has begun full swing, with 159 sugar mills starting operations. Unlike Uttar Pradesh, mills in Maharashtra have little or no sugarcane dues to be paid to the farmers although liquidity issues continue to haunt the sector. 

As per the interview reports of The Indian Express spoke to Maharashtra’s sugar commissioner Shekhar Gaikwad

How do you see the 2020-21 cane crushing season panning out? What do you think are the main concerns for the mills?

The sugar commissionerate’s estimates show that this year, Maharashtra would be crushing 873 lakh tonnes of cane and produce 99 lakh tonnes of sugar. After a lean 2019-20, this would be a year of bumper production, with all regions reporting good crop. The crop condition is also satisfactory, which is good news. Till December 1, the state has produced 16.41 lakh tonnes of sugar and crushed 188.71 lakh tonnes of cane. The initial recovery is low, but that is expected and would improve as the season progresses.

Liquidity is going to be a major concern for mills- as sugar sales are sluggish, they would find it difficult to pay the farmers on time. One-time payment of the Fair and Remunerative Price (FRP) can pose problems for mills. Also, with no clarity about sugar exports, mills might not venture into overseas shores.

Farmers union have asked for one-time payment of FRP, while mills are talking about payment of FRP in instalments. How many mills have entered into agreements with farmers for part payment of FRP? Also would mills who have entered into such agreements still have to pay the interest as indicated by the Sugarcane Control Order 1966?

As I said before, one-time payment of FRP can pose a problem for most mills. We do not have the information about mills which have entered into agreement for part payment of FRP The sugarcane control order is clear- mills will have to pay interest on late payment even if they have got agreements with the farmers for part payment. The only difference is they would have to pay the interest on the part for which payment would be late. In most cases we expect mills would pay 80-70% of the FRP within the stipulated period of 14 days. while the remaining amount would be paid later. Now, they would have to pay interest only on the remaining amount.

What about ethanol production? Do you see mills fulfilling their commitment towards diversion of cane towards ethanol than sugar?

As per discussions with mills, we feel around 110 crore litres of ethanol would be manufactured this season. A majority of the mills would be manufacturing the fuel additive from B-heavy molasses, which is a welcome trend. Most mills have indicated their readiness about tie ups with oil marketing companies to supply ethanol.

The season is starting under the shadows of the Covid-19 pandemic. You have asked mills to prepare for the spread of the infection by ensuring they have either dedicated Covid care centres or tie-ups with hospitals. What has been the response of the mills to this?

Most mills have tied up with private hospitals in their vicinity to set up dedicated Covid care centres. Some have also set up such facilities in their premises. All mills have conducted the compulsory health camp for the migratory workers. before they set about their work. The workers are isolated anyway, given the nature of their work, so chances of a mass spread of infection are relatively less.

Disclaimer: This story is through an aggregated feed from The Indian Express. 

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